Can mainstream media help improve financial decisions?

Submitted by Gunhild Berg
On Mon, 04/15/2013

</p><p>Financial education is important, yet there is a considerable knowledge gap in determining how best to deliver it. Recently, the literature on careful evaluations of financial education has started to move away from classroom based interventions to more innovative delivery mechanisms such as videos, DVDs, and mainstream media. The advantage of entertainment media – television and radio – is that it offers a broad outreach since nearly every household nowadays has a TV and also a captive audience that establishes emotional connections with the show and closely follows the behavior of their favorite actors. Given that entertainment media has been shown to be successful at improving social behavior in the health and education fields, an interesting research question is whether it can also be used for positively influencing financial knowledge and behavior.<br><!--{cke_protected}{C}%3C!%2D%2Dbreak%2D%2D%3E--><br>In a recent paper, Bilal Zia and I look at precisely this question by <a data-cke-saved-href="http://econ.worldbank.org/external/default/main?pagePK=64165259&amp;theSitePK=469372&amp;piPK=64165421&amp;menuPK=64166322&amp;entityID=000158349_20130410132155" href="http://econ.worldbank.org/external/default/main?pagePK=64165259&amp;theSitePK=469372&amp;piPK=64165421&amp;menuPK=64166322&amp;entityID=000158349_20130410132155">analyzing the effect of financial education delivered through a popular television soap opera in South Africa, “Scandal!</a>”. Scandal has been running for eight years (more than 1500 episodes) and produces four weekly episodes. The show is broadcast on eTV, the second most popular station in South Africa, and is especially popular among low-income South Africans. In partnership with the production company of Scandal, the soap introduced a two month long storyline featuring one of the main characters borrowing excessively through hire-purchase, gambling, and falling into a debt trap; and eventually seeking help to find her way out and manage her debt responsibly.<br><br>Our results are quite encouraging. We find significant improvements in content specific financial knowledge, affinity towards borrowing formally, moving away from hire purchase deals, and gambling less – all topics that were woven into and highlighted in the storyline. One aspect of the storyline that did not sustain traction beyond immediate effects was a public call to action for the South African National Debt Mediation Association (NDMA). The soap featured an NDMA counselor who helped the main character build a financial plan to enable her to save enough and repay her debts, yet the longer term analysis shows no recall of the NDMA or even memory that a debt counselor appeared in the soap storyline.<br><br>In order to understand the mechanism of impacts, we conducted focus group which revealed that one main reason for not finding lasting effects on the NDMA is that the NDMA advisor was external to the soap and only appeared in 2-3 episodes. Hence, the audience did not get the opportunity to establish or maintain a connection or following with this character.<br><br>We also find key gender differences in the way men and women think about borrowing. On the quantitative side, the results show that the effect of borrowing formally is driven entirely by men, while the coefficient for women is positive but not significant. During the qualitative interviews, women generally came across as being incredibly reluctant to borrow at all, and only preferred to borrow as a last resort, which helps explain the muted impact on formal borrowing. Men on the other hand were more willing to engage in formal borrowing, often to pay for consumption items and consumer electronics. What is particularly interesting is that men themselves recognized that women tend to be more responsible in their borrowing decisions. Despite thinking differently about reasons to borrow, both men and women exhibited a strong disdain for gambling and agreed that formal borrowing was key to successful financial management.<br><br>Overall, our study shows that entertainment media has the power to capture the attention of individuals, and thereby provides policy makers with an effective and accessible vehicle to deliver carefully designed educational messages that resonate with the audience. The analysis also suggests that emotional connections and familiarity with media personalities play a role in motivating knowledge and behavior change among viewers and that harnessing such potential can be an important channel for achieving development impact. <br><br>For more details on the study, see our two-page <a data-cke-saved-href="http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/EXTFINRES/0,,contentMDK:22053596~pagePK:64168182~piPK:64168060~theSitePK:478060,00.html" href="http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/EXTFINRES/0,,contentMDK:22053596~pagePK:64168182~piPK:64168060~theSitePK:478060,00.html">Finance and Private Sector Development Impact Note.</a><br><br>&nbsp;</p><p>&nbsp;</p>

Financial education is important, yet there is a considerable knowledge gap in determining how best to deliver it. Recently, the literature on careful evaluations of financial education has started to move away from classroom based interventions to more innovative delivery mechanisms such as videos, DVDs, and mainstream media. The advantage of entertainment media – television and radio – is that it offers a broad outreach since nearly every household nowadays has a TV and also a captive audience that establishes emotional connections with the show and closely follows the behavior of their favorite actors. Given that entertainment media has been shown to be successful at improving social behavior in the health and education fields, an interesting research question is whether it can also be used for positively influencing financial knowledge and behavior.

In a recent paper[1], Bilal Zia and I look at precisely this question by analyzing the effect of financial education delivered through a popular television soap opera in South Africa, “Scandal![2]” Scandal has been running for eight years (more than 1500 episodes) and produces four weekly episodes. The show is broadcast on eTV, the second most popular station in South Africa, and is especially popular among low-income South Africans. In partnership with the production company of Scandal, the soap introduced a two month long storyline featuring one of the main characters borrowing excessively through hire-purchase, gambling, and falling into a debt trap; and eventually seeking help to find her way out and manage her debt responsibly.

Our results are quite encouraging. We find significant improvements in content specific financial knowledge, comfort towards borrowing formally, moving away from hire purchase deals[3], and gambling less – all topics that were woven into and highlighted in the storyline. One aspect of the storyline that did not sustain traction beyond immediate effects was a public call to action for the South African National Debt Mediation Association (NDMA). The soap featured an NDMA counselor who helped the main character build a financial plan to enable her to save enough and repay her debts, yet the longer term analysis shows no recall of the NDMA or even memory that a debt counselor appeared in the soap storyline.

In order to understand the mechanism of impacts, we conducted focus group which revealed that one main reason for not finding lasting effects on the NDMA is that the NDMA advisor was external to the soap and only appeared in 2-3 episodes. Hence, the audience did not get the opportunity to establish or maintain a connection or following with this character.

We also find key gender differences in the way men and women think about borrowing. On the quantitative side, the results show that the effect of borrowing formally is driven entirely by men, while the coefficient for women is positive but not significant. During the qualitative interviews, women generally came across as being incredibly reluctant to borrow at all, and only preferred to borrow as a last resort, which helps explain the muted impact on formal borrowing. Men on the other hand were more willing to engage in formal borrowing, often to pay for consumption items and consumer electronics. What is particularly interesting is that men themselves recognized that women tend to be more responsible in their borrowing decisions. Despite thinking differently about reasons to borrow, both men and women exhibited a strong disdain for gambling and agreed that formal borrowing was key to successful financial management.

Overall, our study shows that entertainment media has the power to capture the attention of individuals, and thereby provides policy makers with an effective and accessible vehicle to deliver carefully designed educational messages that resonate with the audience. The analysis also suggests that emotional connections and familiarity with media personalities play a role in motivating knowledge and behavior change among viewers and that harnessing such potential can be an important channel for achieving development impact.